Everybody loves progress. Nobody likes change.

For two years in a row, we’ve featured as nominees and winners at Banking Technology Awards. The event and the awards are probably the most visible pat on the back that people working in financial technology companies get. It basically is the Golden Globes.

For 2018 Banking Tech Awards gave out 19 judged prizes. OP Financial Group’s and Icefires collaboration project was awarded as the Best use of IT in Corporate banking (and shortlisted for Best use of IT in Lending). Obviously, the invoice backed credit line built on the side of OP’s factoring solution is an example of excellence and innovation in the use of IT in financial services. At least Banking Tech Awards folks think so.

So what’s innovative about a credit line, you might ask. And no, it is not much-hyped techs like machine learning, blockchain or any of that. The essence of innovation here is simple, it lies in exploring the customer needs and accommodating them in the most efficient and friendly way. And this, of course, means making the most of the technological capabilities.

Basically, for a customer, it is just a small button with a lot of power on the new invoice issuing page within an SME’s accounting system. If you know that you need the money before you will actually get it (hint: long due periods), you can click the button and voila! with few clicks, you’ll instantly get the funds.

It’s not rocket science. But we needed to massively improve onboarding and decisioning processes, create plug-and-play factoring solution that several different accounting and invoicing platforms can connect to, improve the functionalities of risk management due to invoice-backed lending, renew operation management and much more.

From the bank’s point of view, we managed to eliminate tedious and expensive processes such as manually managing customer applications or background checks while the work of the back-office people has been reduced to intervening only to solve edge cases.

All this has lead to a situation where one person can easily manage a loan portfolio extending into tens of millions of Euros. Minimizing manual labour allows focussing on what is really important for the bank — risk management and maximising returns compared to risk. And we can safely say that the relevant KPIs for OP Financial Group are staggering.

This is the best available outcome there is — a win-win situation for the bank and clients because everyone can focus on their core business.

Our Head of R&D Ove Kreison (in the middle) and Head of Business Rivo Uibo (on the right) with partners from OP Financial Group. December 2018.

The same conclusion can be drawn from another recent (and actually highly innovative) project that reduced the time and bureaucracy for paying salaries and related taxes for SMEs. Briefly, together with Estonian banking pioneer LHV Bank and unbelievably open and flexible Estonian Tax and Customs Board, we created a solution where re-occurring salary payments can be made with one click (more details about the project are up on our website). And in fact, technically it is completely possible to fully automate the salary payments procedure, thus minimizing the company’s accountant’s workload.

The real impact can be seen only within each and every organization actually using it.

As far as we know this is actually the first time when a bank and tax office have worked together to create new value for private companies.

The bank effectively communicates with the tax board so you as the accountant or small business owner do not have to. The most complex part was not the technologies used but the tax office’s own business (in their case taxation) complexity.

As in most cases, tax declarations were created after the agreed taxation period i.e when the month had ended (and still are for those who do not use the salary payment solution). Now the taxes (in Estonian case income tax, social tax, and unemployment taxes) are all calculated, declared, confirmed and paid in one click. And all this complexity is hidden in an elegant automated solution. In the future that might lead to moving from monthly declarations to continuous data collection and payments.

Excellence and innovation were also noticed (by Banking Technology Awards) for our 2017 project done together with Bigbank Group. That one was chosen as the nominee for the Best Tech Overhaul Project.

What we consider truly innovative for this particular project was the fact that an established international bank took on such a massive rebuilding of their whole banking core.

Their attitude and willingness to start a process with that scope is pretty much unprecedented and absolutely worth using the adjective innovative. By moving on to microservices, the whole technical architecture and workflow radically changed towards more automation on all possible levels inside the organization. It is worth to mention that their strategy has been to take the new core into use country by country, thus slowly but steadily modernizing their whole organization in all of their markets. In the case of Bigbank, we’ve noticed that fortune indeed favours the brave.

There is much talk about how banks have to up their game to be relevant in the decades to come. The desperate need to “innovate” has resulted in accelerator programs, hackathons and similar that are supposed to renew the organisation. They can work, of course. They also tie the bank to the tech community, which is relevant as well.

However, in a lot of cases, this is a mere facade – small, incremental changes or little nice-to-have functions.

Reflecting from the cases described, taking on large-scale projects that bring new and unprecedented value, business, risk and tech teams within banks need to be aligned on all levels. One person acting as Head of Innovation will never suffice to bring the whole business to a new level.

And moving from bold decisions to real working solutions, everybody needs to be on board. Gaining trust and building smooth communication within the organization is always a challenge for every ambitious project. Especially when it means that people need to change.

* * *

Written by: Kadri Sundja

We use cookies to track visits to our website. You can also decline tracking and no data is forwarded to third parties.